Articles: Tax & budget

Submission on Electronic Road Pricing
Speak out! Put market forces to work on the roads. Read our response and then tell the Government whether you agree or not. Consultation ends this Friday, 18-Mar-2016. (12-Mar-2016)

Seminar at UK Consulate in HK on how to minimise British taxes
Company media release, 25-Jun-2014
Now that the consulate no longer handles passport renewals, which has been transferred to the black hole of Liverpool, they have more time and/or space on their hands - but hosting a conference on how to reduce British government revenue might not be the best use of that!

Moulin Global Eyecare v Inland Revenue
HK Court of Final Appeal, 13-Mar-2014
By a majority, the CFA rules that the Government gets to keep its windfall of tax paid on fake profits reported by Moulin. Lord Robert Walker, leading the judgment, attributes the actions of the fraudulent directors to the company, and says that the company "chose not to" object to the tax within the 1 month timeframe, even though it was still being run by fraudsters at that point (and they would of course not cause the company to correct the fake profits in the filings). Justice Robert Tang Ching is the lone voice of common sense. Webb-site now calls on the Government to table legislation to correct this anomaly.

Double Stamp Duty: Webb to speak at CanCham, Wednesday 3-Jul
Company media release, 26-Jun-2013
Seats are still available for a breakfast organised by the Canadian Chamber of Commerce next Wednesday, at which a panel of legislators, property experts and free-market advocates will lead a discussion of the Government's proposed doubling of stamp duty, which, like the 15% "Buyer's Stamp Duty" and the higher rate and duration of "Special Stamp Duty" has not yet become law. Hit the link to sign up.

Second submission to LegCo on DSD
This morning's session with public delegations, in which a junior civil servant was fielded, leaves a number of fundamental policy questions to be answered by the principal officials. Here they are. (13-Jun-2013)

Avoiding double stamp duty
A HK$1.6bn deal announced yesterday neatly demonstrates how the proposed Double Stamp Duty will drive higher-end transactions into the corporate transfer market, while freezing up the low end with prohibitive taxation. We'll be speaking against DSD in LegCo tomorrow. (12-Jun-2013)

The dividend tax myth
We correct the Financial Secretary's latest gaffe and explain why a further tax on corporate profits in the form of a dividend tax would necessitate a steeper salaries tax, a capital gains tax, a tax on worldwide investment income and ultimately a loss of economic output and revenue. It is a myth that dividends are tax-free. (5-Mar-2013)

Double stamp duty
We explain the fallacy in the proposed so-called "demand-side" measures announced on Friday. Higher transaction costs reduce volumes, not prices, and affect both buyers and sellers. We ask whether this is really worth trashing HK's reputation as a free and open economy and what this meddling is trying to achieve. (25-Feb-2013)

Help the needy, not the needless
We price the proposed Old Age Living Allowance if means-testing is scrapped to make it a universal pension, and what it would mean for tax rates down the road to a welfare state. We show you the increasingly educated and affluent profile of future retirees, and call on Government to refocus on a better, properly means-tested and rebranded elderly CSSA system. We also look at the $2 fare scheme, another scattergun attempt at welfare. (12-Oct-2012)

HK land for HK xenophobes
We explain why the proposed "HK land for HK people" scheme, while superficially appealing to voters, won't work, and we again propose measures to make the housing and tax system simpler and fairer, including elimination of stamp duty and mortgage interest deductions, and land lease reform to open the market and lower the premiums on new leases. (6-Sep-2012)

Frieda Tong Shen v Yeung Tsz Ying & others
HK Court of First Instance, 12-Jun-2012
This case shows, as Webb-site predicted, that people can avoid the punitive Special Stamp Duty by selling the companies which have contracted to purchase properties (in this case, at SHKP's Imperial Cullinan), rather than selling the properties themselves. See para 12 of the judgment.

A class act for those caught in the middle
HK Standard, 2-Feb-2012
Alvin Lee Chi Wing, chairman of "Voice of the Middle Class" said he pays almost HK$100k in salaries tax (before the Budget) on a household income of $60k per month (that's $720k per year). We doubt it: he gets married person's allowance of $216k, child allowance of $60k and allowances for supporting his parents of $72k. So we estimate his total allowances were $348k, and tax on the remaining $360k was $49,200.

BoCom's bonus-share tax hit
BoCom (3328) found a nasty wrinkle in China's taxes that resulted in an effective 60% tax rate on its final dividend, because of a tax on bonus shares. Webb-site calls on the Chinese Government to clarify its tax treatment of bonus issues so that there will be no withholding tax, because they are not a distribution of value. Further, it would be better and fairer to abolish the distortive dividend withholding tax and raise corporate tax rates instead. (29-Sep-2011)

Traffic Truths
The Government's budget proposal on private car First Registration Tax is based on a false premise, and will not achieve its stated objective of congestion reduction. Our research shows that despite higher ownership, private cars occupy less of the roadspace than they did in 2000. We call for a fundamental review of road transport policy and make proposals to achieve a reduction in congestion and road traffic pollution. (13-Apr-2011)

The cost of a universal pension
Following Jim Walker's guest article today, we run the numbers to show why a universal pension would put HK on the road to fiscal hell, a high-tax European-style welfare state. The ageing population means a HK$6k per month pension in 2039 would imply at least a 35% tax rate, and probably higher as mobile profits and professionals leave. Even 13 years from now, tax rates would rise to at least 28.5% to balance the budget. (12-Mar-2011)

Universal pensions in HK: the case against
In a guest contribution, economist Jim Walker lays out the case against calls for a universal pension in HK, including the lessons from history of the European welfare state. (12-Mar-2011)

Now withdraw the SSD proposal
Latest disclosures show that the increase in short-term resales from 2009 to 2010 was only 1.9% of transactions, and fewer than 1 in 5 are in that category. Having abandoned one unpopular budget measure this week already, the Government should now do the right thing and abandon the Special Stamp Duty proposal. It is illegitimate, unconstitutional, creates too many unintended victims and runs the risk of chaos upon a successful judicial review. (2-Mar-2011)

Reforming Salaries Tax
The budget was devoid of any structural reform to public finances. In our first article in a series, Webb-site fills the void with a proposal to reform Salaries Tax to make it a simpler, fairer and flat tax. (24-Feb-2011)

HKEx welcomes iBonds, hopes to list them
Company media release, 23-Feb-2011
It would be nice if the bonds were actually admitted to CCASS and traded on the stock exchange, rather than the phoney "listings" that all the existing Government bonds have, where there is no trading on HKEx and retail investors are held captive by the banks in the over-the-counter market.

SSD, the Basic Law, and a lesson from Singapore
The Government has responded to LegCo on our concerns that the proposed Special Stamp Duty is unconstitutional. We go further in this article, explaining why SSD would not be a legitimate tax protected by Basic Law Article 108. We'll also look at the lesson in political reality from Singapore's 1996-97 experiment, and we propose a fairer, focused alternative, in the form of a withholding system for profits tax. (30-Jan-2011)

Government criticises Stamp Duty proposal
In a case of policy schizophrenia, the Government said a special stamp duty would be unfair, cause additional hardship to those in financial difficulties, and amount to double taxation. Then they proposed it anyway, based on a bunch of selective, deceptive and alarmist statistics, which we dissect. Legislators should kill this proposal or at least insert a sunset clause so that it expires with Donald Tsang's office. Exceptional times do not call for irrational measures. (26-Nov-2010)

The Community Collusion Fund
We look at the numerous problems with Donald Tsang's proposed Community Care Fund. The boards of listed companies which support it either expect sufficient corporate benefit in return or are breaching their fiduciary duties. We call on Legislators to kill the CCF by vetoing the HK$5bn allocation and instead get the government to reform its welfare system using the normal budgetary process. (4-Nov-2010)

Hong Kong Land Lease Reform, Part 2
We advocate a rebalancing of HK's land lease system, reducing up-front premiums in exchange for a perpetual stream of future ground rents and addressing a number of festering problems simultaneously. We also suggest a Premium Release Scheme to return hoarded capital to the market, and PRS Bonds or HIPS (HK Income Protected Securities) to help finance it, providing a new long-term investment option for retirement funds. (1-Nov-2010)

Hong Kong Land Lease Reform, Part 1
In the first of a two-part article, we examine the 169-year history of lease tenures in HK, which ended up with a high-premium low-rent land lease policy with relatively short leases. It wasn't always this way, but before making the case for change, we explain the historical context. (7-Oct-2010)

HK's stamp duty addiction
We look at the HK Government's opium-like addiction to stamp duty revenues, which have more than quintupled in 7 years. The budget asks for another fix. Stamp duty is sand in the wheels of the economy, distorting economic decisions and reducing economic output. It should be abolished rather than increased further. Higher stamp duty does not improve property affordability. HK needs a root-and-branch review of taxation to refocus on fair taxation of GDP rather than one-off measures and distortive policies. (2-Mar-2010)

The Christmas Pick
After a decade of Christmas Picks, Webb-site.com has produced a compound gain of 1118%, compared with 87% on the Hang Seng Index. That's an average 28.4% per year compared with 6.4% on the HSI. This is getting out of hand! Many have asked whether we would set up a "Good Governance Fund" for HK investors. We tell you why this is currently unattractive, and what the Government should do to facilitate the closed-end fund sector. (18-Dec-2009)

Lights, camera...budget!
We look at the recent history of HK Government intervention in the movie industry, the land grants involved, and the proposal to throw HK$300m of public money into private movie production. We urge LegCo to cut this scene from Hong Kong's script. Tell them what you think in our opinion poll. (9-Mar-2007)

The Housing Lark
Why does the HK Government continue prosecuting civil servants and educators for maximising their remuneration by claiming rental allowances which, if they didn't own the property, they would be entitled to anyway? Surely people should be paid what they are worth to an employer, not based on what they own. We also look at the tax loophole which incentivises rental allowances in the first place. (9-Dec-2006)

Tax Benefits
One big tax loophole that the Government left open in today's budget is the Housing Loophole - as a result, Hong Kong taxes people not on the basis of how much they are paid, but how they are paid. A person who would otherwise reach the top rate of 16% can cut that to just 6.87%, with the employer's co-operation. We take you through the numbers. (10-Mar-2004)